BILL NUMBER: SB 514	CHAPTERED  10/10/99

	CHAPTER   743
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 7, 1999
	PASSED THE SENATE   SEPTEMBER 10, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 10, 1999
	AMENDED IN ASSEMBLY   SEPTEMBER 10, 1999
	AMENDED IN SENATE   JUNE 2, 1999
	AMENDED IN SENATE   APRIL 12, 1999

INTRODUCED BY   Senator Chesbro

                        FEBRUARY 18, 1999

   An act to repeal and add Section 22825.01 to the Government Code,
relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 514, Chesbro.  Health care coverage:  rural areas:  PERS.
   The existing Public Employees' Medical and Hospital Care Act
provides, for each state employee or annuitant living where there is
not available a competitive health maintenance organization and a
fee-for-service health plan is the only option, state employer
contributions on the basis of the PERS Care premiums.
   This bill would delete that provision and establish the Rural
Health Care Equity Trust Fund to be administered by the Department of
Personnel administration to provide subsidies and reimbursements, as
specified, for certain health care premiums and health care costs
incurred by state employees and annuitants in rural areas on or after
January 1, 2000, as defined. The provisions of the bill would cease
to be operative on January 1, 2005, or earlier, as specified.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Notwithstanding Section 22825.1 of the Government Code,
it is the intent of the Legislature to provide a subsidy to assist
state employees and annuitants living in defined rural areas who do
not have genuine access to a competitive health maintenance
organization and who, instead, must choose a higher-than-average cost
health maintenance organization or one or more preferred provider
plans and incur substantially higher out-of-pocket expenses for
health care.
  SEC. 2.  Section 22825.01 of the Government Code is repealed.
  SEC. 3.  Section 22825.01 is added to the Government Code, to read:

   22825.01.  (a) As used in this section, the following definitions
shall apply:
   (1) A "rural area" means an area in which there is no
board-approved health maintenance organization plan available for
enrollment by state employees or annuitants who live in the area.
   (2) "Coinsurance" means the provision of a medical plan design in
which the plan or insurer and state employee or annuitant share the
cost of hospital or medical expenses at a specified ratio.
   (3) A "deductible" means the annual amount of out-of-pocket
medical expenses that state employees or annuitants must pay before
the insurer or self-funded plan begins paying for expenses.
   (4) "Department" means the Department of Personnel Administration.

   (5) "Fund" means the Rural Healthcare Equity Trust Fund.
   (b) (1) The Rural Health Care Equity Trust Fund is hereby
established in the State Treasury for the purpose  of funding the
subsidization and reimbursement of premium costs, deductibles,
coinsurance,, and other out-of-pocket health care costs, which would
otherwise be covered if the state employee or annuitant was enrolled
in a board-approved health maintenance organization plan, paid by
employees and annuitants living in rural areas, as authorized by this
section.  The fund shall be administered by the department or by a
third-party administrator approved by the department in a manner
consistent with all applicable state and federal laws.  Interest
earned from the fund shall be used to offset administrative costs.
The board shall determine the rural area for each subsequent fiscal
year at the same meeting when the board approves premiums for health
maintenance organizations.
   (2) Separate accounts shall be maintained within the fund for (A)
employees, as defined in subdivision (c) of Section 3513; (B)
excluded employees, as defined in subdivision (b) of Section 3527;
and (C) annuitants as defined in subdivision (e) of Section 22754.
   (c) Moneys in the Rural Health Care Equity Trust Fund shall be
allocated to the separate accounts as follows:
   (1) As the employer's contribution with respect to each employee,
as defined in subdivision (c) of Section 3513, who lives in a rural
area and who is otherwise eligible, an amount to be determined
through the collective bargaining process.
   (2) As the employer's contribution with respect to each excluded
employee, as defined in subdivision (b) of Section 3527, who lives in
a rural area and who is  otherwise eligible, an amount equal to, but
not to exceed, the amount given to eligible state employees, as
defined in subdivision (c) of Section 3513, who live in a rural area.

   (3) As the employer's contribution with respect to each annuitant,
as defined in subdivision (e) of Section 22754, who lives in a rural
area, is not a Medicare participant, and who is otherwise eligible,
an amount not to exceed five hundred dollars ($500) per year.
   (4) As to the state's contribution with respect to each state
annuitant, as defined in subdivision (e) of Section 22754 who lives
in a rural area, participates in a board-approved,
Medicare-coordinated health plan, participates in a board-approved
health plan, and is otherwise eligible, an amount equal to the
Medicare Part B premiums incurred by the annuitant, not to exceed
seventy-five dollars ($75) per month.  The state shall not reimburse
for penalty amounts.
   (5) As to an employee who enters state service or leaves state
service during a fiscal year, contributions for the employee shall be
made on a pro rata basis.  A similar computation shall be used for
anyone entering or leaving the bargaining unit, including a person
who enters the bargaining unit by promotion in mid-fiscal year.
   (d) Each fund of the State Treasury, other than the General Fund,
shall reimburse the General Fund for any sums allocated pursuant to
subdivision (c) for employees and annuitants whose compensation or
annuities are paid from that fund.
   (e) Notwithstanding any other provision of law and subject to the
availability of funds, moneys within the Rural Health Care Equity
Trust Fund shall be disbursed for the benefit of an employee who
lives in a rural area and who is otherwise eligible.  The
disbursements shall, where there is no board-approved health
maintenance organization plan available in an area that is open for
enrollment for the employee, (1) subsidize the preferred provider
plan premiums for the employee, by an amount equal to the difference
between the weighted average of board-approved health maintenance
organization premiums and the lowest board-approved preferred
provider plan premium available under this part and (2) reimburse the
employee for a portion or all of his or her incurred deductibles,
coinsurances, and other out-of-pocket health-related expenses, which
would otherwise be covered if the employee was enrolled in a
board-approved health maintenance organization plan.
   These subsidies and reimbursements shall be provided according to
a plan determined by the department, which may include, but is not
limited to, a supplemental insurance plan, a medical reimbursement
account, or a medical spending account plan.
   (f) Notwithstanding any other provision of law and subject to the
availability of funds, moneys within the Rural Health Care Equity
Trust Fund shall be disbursed for the benefit of eligible annuitants,
as defined in subdivision (e) of Section 22754, who live in rural
areas and who are otherwise eligible.  The disbursements shall, where
there is not board-approved health maintenance organization plan
available and open to enrollment by the annuitant, either (A)
reimburse the annuitant if he or she is not a Medicare participant,
for some or all of his or her deductibles, not to exceed five hundred
dollars ($500) per fiscal year, or (B) reimburse Medicare Part B
premiums incurred by the annuitant, not to exceed seventy-five
dollars ($75) per month, exclusive of penalties.  These
reimbursements shall be provided by the department.
   The state shall not reimburse for penalty amounts.
   (g) Any moneys remaining in any account of the fund at the end of
any fiscal year shall remain in the account for use in subsequent
fiscal years until the account is terminated.  Moneys remaining in
any account of the fund upon termination, after payment of all
outstanding expenses and claims incurred prior to the date of
termination, shall be deposited in the General Fund.
   (h) The Legislature finds and declares that the Rural Health Care
Equity Trust Fund is a trust fund held for the exclusive benefit of
employees, annuitants, and family members.
   (h) This section shall cease to be operative on January 1, 2005,
or on such earlier date as the board makes a formal determination
that HMOs are no longer the most cost-effective health care plans
offered by the board.
  SEC. 4.  All qualified employees and annuitants may seek
reimbursement for qualified medical expenses incurred on or after
January 1, 2000.
